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FSA fines stockbroker £511,000

The FSA has today fined Rowan Dartington & Co £511,000 for failing to protect and segregate client money for over two years.

Under the FSA’s client money rules, firms are required to keep client money separate from the firm’s money in segregated accounts with trust status. This protects client money in the event of the firm’s insolvency.

Rowan Dartington put a new software system in place in May 2007 but failed to properly test and implement it, which led to a breakdown in Rowan Dartington’s reconciliation processes. 

The FSA says the resulting problems meant that the firm could not rely on the accuracy of its internal books and records, and so could not be confident it was segregating the right amount of its clients’ money. 

It also contributed to Rowan Dartington being unable to demonstrate the recoverability of up to £1.4m of its own net assets in its accounting records.

In a series of breaches between May 2007 and September 2009, Rowan Dartington also placed its clients’ money at risk by failing to segregate client money for contingent liability business, including spread bets and options.

The firm also failed to properly ensure it had the correct trust letters from its banks and counterparties.

Rowan Dartington co-operated with the FSA during the investigation and agreed to settle the matter at an early stage, qualifying for a 30 per cent discount. Without the discount the firm would have been fined £730,000. 

The FSA says no clients have suffered actual financial loss as a result of these issues.

FSA director of the enforcement and financial crime division Margaret Cole says: “Rowan Dartington & Co committed a serious breach of our client money rules by failing to protect its clients’ money.  The breaches took place over a long period and the risks they posed were compounded by the fact that this was a period of market turmoil.

“Ensuring the necessary client money safeguards are in place is a key element of consumer protection, and firms of all sizes must ensure that any client money they hold is properly segregated.”

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Comments

There are 2 comments at the moment, we would love to hear your opinion too.

  1. steven balmer 7th June 2010 at 5:02 pm

    The FSA are very keen to hand out fines. I’m not saying this isn’t right but considering there has been no loss of clients funds where does the money go to?
    With massive increases in costs of regulation is this the FSA simply filling the pot to boost their own inflated salaries??

  2. That’s not how the FSA’s funding model works. Fines are used to reduce the next year’s levy on other firms in the same fee blocks. IIRC Rowan Dartington’s an adviser and investment manager, so who knows – maybe we’ll see £0.02 off our fees next year as a result of this?

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